HSBC fined £12m by US watchdog due to ‘widespread and longstanding failures’ in bank’s Whatsapp use
HSBC has been fined $15m (£12m) by the US Securities and Exchange Commission (SEC) as banks continue to pay the price for the use of private messaging services such as Whatsapp.
The penalty was issued in response to “widespread and longstanding failures” by the bank and its employees to “maintain and preserve electronic communications.”
According to the SEC’s investigation, employees at the bank often used platforms like Whatsapp to discuss business dealings. In violation of US record-keeping laws, these conversations were then not preserved.
“The failings involved employees at multiple levels of authority, including supervisors and senior executives,” the SEC said.
US brokerage firm Scotia Capital was also hit with a $7.5m (£6m) fine for similar offences. The SEC noted that both HSBC and Scotia Capital self-reported the failings. Their fines were lower as a result.
Gurbir Grewal, director of the SEC’s enforcement division, said the fines remind firms of “the importance of following SEC record-keeping requirements” but also shows “the value of disclosing violations when they do occur.”
“Both HSBC and Scotia Capital self-reported and self-remediated their record-keeping violations, and the reduced penalties in these cases reflect their efforts and cooperation,” Grewal continued.
An HSBC spokeswoman said: “The bank is pleased to put these matters behind us, and we appreciate that both the SEC and Commodity Futures Trading Commission recognise our commitment to remediating our internal controls when needed.
“In recent years, we have made significant investments in enhancing our compliance procedures and have worked diligently to maintain the highest standards for professional conduct throughout our organisation.”
There has been a Wall Street-wide crackdown on the use of private messaging services in conducting official business, which has seen the SEC hand out $1.8bn worth of fines to 16 lenders including Goldman, Citi, and Morgan Stanley.